Liquidate a 401k? Any advice?

Hi
My wife has a relatively small leftover sum in her 401k from her previous life before moving to the U.K. It was with Principal but her previous employer decided to move it to Fidelity recently. She doesn’t have much experience dealing with either but she’s now thinking of rolling this over to an IRA and consolidating.

Any thoughts on which providers work well internationally?

Is there any way to transfer the money to the UK without penalties? (I’m guessing not)

Thanks very much

I think there is little to no chance of moving it to the UK without cashing it out. My wife and I rolled our 401ks to IRAs with Vanguard and manage them from here.  However we did the rollovers to IRAs before we left the USA.

Thanks!!

I’m looking more into the penalty option because she’s a stay-at-home mom and the amount is relatively small so she might not end up paying tax. As far as I understand she’ll have to pay 10% penalty tax + income tax but that would be offset by her standard deduction (I think, not sure yet)

I’m not 100% clear if she’ll have to file a self-assessment in the U.K. and pay tax here. I think the answer is no but wondering if anyone has experience liquidating a 401k?

Thanks!!

I’m looking more into the penalty option because she’s a stay-at-home mom and the amount is relatively small so she might not end up paying tax. As far as I understand she’ll have to pay 10% penalty tax + income tax but that would be offset by her standard deduction (I think, not sure yet)

I’m not 100% clear if she’ll have to file a self-assessment in the U.K. and pay tax here. I think the answer is no but wondering if anyone has experience liquidating a 401k?

I would think liquidating a small lump sum pension like that might qualify as being taxable only in the USA. I agree that for a small sum that I would probably also take the 10% penalty and get rid of the hassle year on year although as a USC she will need to file a US return and FBAR every year she reaches the income and financial account limits.

No-one knows what HMRCs view is - because HMRC are changing their thinking. I'd budget for tax at the higher of UK or US tax rates - anything lower will be a blessing.

No-one knows what HMRCs view is - because HMRC are changing their thinking. I'd budget for tax at the higher of UK or US tax rates - anything lower will be a blessing.

As a stay at home mum then unless the “small leftover sum” is greater than £12,570 it is going to be zero income tax in the UK regardless of what HMRC change their thinking to.